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Unequal Distribution of Wealth

High Tariffs and War Debts

Overproduction in Industry andAgriculture

1928 Presidential Election

Farm crisis

Federal Reserve Monetary Policy

Stock Market Crash and Financial Panic

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UNEQUALDISTRIBUTION

OF WEALTH OVERPRODUCTION

HIGH TARIFFSAND WAR

DEBTS

CAUSES OFTHE GREAT

DEPRESSION

AGRICULTURE

INDUSTRY

MONETARYPOLICY

STOCK MARKETCRASH AND

FINANCIAL PANIC

Historians disagree as to the causes of the GreatDepression. Most scholars would include:

4

The 1920s wasknown as a

prosperous time, butnot for everyone

Installment buying,using credit and

paying back in smallamounts, was

introduced whichallowed people to buycars, radios and othernew products of the

1920s.

Farmers, however,were in a depressionthroughout the whole

decade.

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RURAL POVERTY IN THE 1920’S

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Although the nation'swealth grew by billionsthroughout the 1920s, itwas not distributedevenly.

The top 1% received a75% increase in theirdisposable income whilethe other 99% saw anaverage 9% increase intheir disposable income.

80% of Americans hadno savings at all.

UNEQUAL DISTRIBUTION OF WEALTH

Disposable income is money remaining after the necessities of life havebeen paid for.

Happy Feet song

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0

10

20

30

40

50

60

70

80

1929

TOP 1%

BOTTOM 99%

The chart shows that 99% of the population received a9% increase in their income, while the top 1% saw

their income rise by 75%.

1,230,000 Americans

121,770,000 Americans

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65

70

75

80

85

90

1923 1929

income

The economy grew by billions throughout the 1920s.Total realized income rose from $74.3 billion in 1923

to $89 billion in 1929

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0

100

200

300

400

500

600

700

1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941

Chart showing wages of unskilled workers. Notice howlittle the wages changed during the supposed prosperity

of the 1920’s.

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HIGH TARIFFS AND WAR DEBTS

At the end of World War I, European nations owed over$10 billion ($115 billion in 2002 dollars) to their formerally, the United States. Their economies had beendevastated by war and they had no way of paying themoney back.

The U.S. insisted their former allies pay the money.This forced the allies to demand Germany pay thereparations imposed on her as a result of the Treaty ofVersailles. All of this later led to a financial crisis whenEurope could not purchase goods from the U.S. This debtcontributed to the Great Depression.

In 1922, the U.S. passed the Fordney-Mc Cumber Act,which instituted high tariffs on industrial products. Atariff is a tax on imports. Other nations soon retaliatedand world trade declined helping bring on the greatdepression.

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Factories wereproducing products,however wages forworkers were notrising enough for themto buy them.

Too few workerscould afford to buy thefactory output.

The surplusproducts could not besold overseas due tohigh tariffs and lack ofmoney in Europe.

OVERPRODUCTION IN INDUSTRY

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FARM OVERPRODUCTION

Due to surpluses andoverproduction, farm incomesdropped throughout the 1920’s.

The price of farm land fell from $69per acre in 1920 t0 $31 in 1930.

Agriculture was in a depressionwhich began in 1920, lasting untilthe outbreak of World War II in1939.

In 1929 the average annual incomefor an American family was $750,but for farm families it was only$273.

The problems in the agriculturalsector had a large impact since 30%of Americans still lived on farms.

Surplus ears ofcorn

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0.901.79Milk (per cwt)

3.807.50Hogs (per cwt)

0.100.24Wool (per lb)

0.160.25Butterfat (per lb)

0.130.21Butter (per lb)

0.170.34Oats (per bushel)

0.410.88Wheat (per bushel)

0.200.56Corn (per bushel)

1932-19331912-1913Agriculturalproduct

Table shows the sharp decline in the prices ofvarious products from American farms

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In the 1928 presidential contest,Democratic New York GovernorAl Smith ran against RepublicanSecretary of Commerce Herbert

Hoover. Many were suspicious ofSmith who was Catholic, whileHoover was popular for feedingstarving Europeans after WWI.

Al Smith

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Hoover’s winning platform was based on continuedprosperity

“We in America today arenearer to the final triumph

over poverty than ever beforein the history of any land. Thepoorhouse is vanishing from

among us.” 1928

Hooveraccepting

theRepublicannomination

for president

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"I do not believethat the power andduty of the GeneralGovernment oughtto be extended to

the relief ofindividual suffering.

. . . The lessonshould be constantly

enforced thatthough the people

support theGovernment the

Government shouldnot support the

people."(1930)

President Hoover’s belief in self-reliancewould later affect his ideas about how to best

solve the upcoming depression

President and Mrs. Hoover

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ONE OF HOOVER’S FIRST ACTS WASDEALING WITH THE FARM CRISIS

CandidateHoover: "Themost urgent

economicproblem . . .is agriculture.

It must be

solved.

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2

3

4

5

6

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1929 1932

Farm income inbillions

Farmers, who had been suffering during the 1920s,suffered further declines during the Great Depression.Wholesale food prices collapsed, which led to a lack ofmoney to purchase new equipment and many could not

pay for their mortgages and lost their farms.

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1.5338.815.731.837.91932

2.0946.421.332.139.01931

3.5491.532.259.467.01930

3.83131.541.979.8103.41929

4.9057.240.784.399.81928

5.04108.947.184.9119.01927

4.97136.340.175.3121.71926

4.56166.338.869.9143.71925

5.6871.547.8105.3124.71924

6.7891.540.783.592.61923

4.6868.637.475.296.61922

3.99113.532.252.7103.01921

5.26133.253.861.0182.61920

9.33191.176.7150.7216.31919

PEANUTSPOTATOESOATSCORNWHEATYEAR

U.S. Department of Agriculture’s yearbook from 1934shows the unstable prices of foodstuff

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Pictured below is one of thousands of farmforeclosure sales. A foreclosure happens when anowner cannot pay for their mortgage and the bank

repossesses the property to sell it.

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49321821407Balance

10191655770Averageexpenditures

151238372177Average grossreceipts

193219181910

Table shows the extreme drop in profits forfarmers. This explains why they were unableto afford new equipment, and in many cases

their mortgages, which led to the hundreds ofthousands of foreclosures on farms.

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Federal Reserve Monetary Policy

The Federal ReserveSystem was created in 1913to help stabilize the economyby establishing a centralbanking system for the U.S.

A major goal is to deal withbank panics.

Monetary policymanipulates the money supplyto help strengthen theeconomy.

At the beginning of theGreat Depression, the Fed didnot address failing banks, andmany scholars argue theiridleness worsened thesituation.

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Millions of average Americans began speculating in thestock market in the 1920s. Speculating is buying risky

stocks out of a desire to get rich quick, rather thaninvesting because of a sound investment.

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STOCK MARKET CRASH AND FINANCIALPANIC

WALL STREET ON THE DAY OFTHE CRASH, OCTOBER 1929

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Stocks wereoverpriced due tospeculation, meaningthey were not worththeir sale price

Massive fraud andillegal activityoccurred due to alack of regulationand rules

Margin buying, orbuying using credit

Federal reservepolicy

Major reasons for the stock market crash inOctober 1929

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"Brother, Can You Spare a Dime," lyrics by Yip Harburg, music by Jay Gorney(1931)

They used to tell me I was building a dream, and so I followed the mob,When there was earth to plow, or guns to bear, I was always there right on the job.They used to tell me I was building a dream, with peace and glory ahead,Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run, made it race against time.Once I built a railroad; now it's done. Brother, can you spare a dime?Once I built a tower, up to the sun, brick, and rivet, and lime;Once I built a tower, now it's done. Brother, can you spare a dime?

Once in khaki suits, gee we looked swell,Full of that Yankee Doodly Dum,Half a million boots went slogging through Hell,And I was the kid with the drum!

Say, don't you remember, they called me Al; it was Al all the time.Why don't you remember, I'm your pal? Buddy, can you spare a dime?

Once in khaki suits, gee we looked swell,Full of that Yankee Doodly Dum,Half a million boots went slogging through Hell,And I was the kid with the drum!

Say, don't you remember, they called me Al; it was Al all the time.Say, don't you remember, I'm your pal? Buddy, can you spare a dime?

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Multimedia Learning’s “Great Depression andNew Deal” PowerPoint covers all the majortopics throughout the 1930s. The next slideshows the table of contents of the 177 slide

presentation.

MML also offers “The Great Crash StockMarket Simulation Game” where students

become investors in the Great Bull Market of1928-1929 and in the Bear Market thatfollowed, making and losing fortunes as

industrial, rail, and utility stocks rise and fallin this easy to use simulation of the Wall

Street frenzy.

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CAUSES OF THE GREAT DEPRESSION....................................Slide 6

HERBERT HOOVER BECOMES PRESIDENT…..………………..…Slide 18

THE DEPRESSION BEGINS…………………………………………….Slide 27

HOOVER AND THE DEPRESSION…………………………………….Slide 32

THE BONUS ARMY……………………………………………………..…Slide 43

ELECTION OF 1932: FDR BECOMES PRESIDENT……………....Slide 50

THE “100” DAYS AND THE NEW DEAL……………………….......Slide 62

THE NEW DEAL COMES UNDER ATTACK………………….………Slide 90

SECOND NEW DEAL………….………………………………..……… Slide 102

LABOR STRIFE IN THE 1930’S……………………………………..Slide 123

ELECTION OF 1936: COURT PACKING SCHEME………………Slide 133

AMERICA IN THE 1930’S: DUST BOWL ETC………………….Slide 145